Home' Technology Review : May June 2014 Contents 74
MIT TECHNOLOGY REVIEW
BUSINESS REPORT — SPIES AND TECHNOLOGY
Prime ministers, business executives,
and ordinary citizens clamor for phones
that can’t be snooped on.
● Ever since Edward Snowden came for-
ward with a trove of secret documents
about the National Security Agency, busi-
ness has been booming for Les Goldsmith,
CEO of ESD America.
Goldsmith’s company sells a $3,500
“cryptophone” that scrambles calls so they
can’t be listened in on. Until recently, the
high-priced smartphone was something of
a James Bond–style novelty item. But news
of extensive U.S. eavesdropping on people
including heads of state has sent demand
from wary companies and governments
soaring. “We’re producing 400 a week and
can’t really keep up,” says Goldsmith.
The Las Vegas–based company pre-
pares and packages the device, called the
GSMK CryptoPhone, by first wiping the
software from an ordinary $350 Samsung
Galaxy S3 handset. It then adds a ver-
sion of Google’s Android operating sys-
tem, licensed from the German company
GSMK, that has been tweaked to add call
encryption and fix security flaws.
Sales have tripled since Snowden’s
revelations began last June, and close to
100,000 of the handsets are in use world-
wide, according to Goldsmith. Secure calls
work only between two cryptophones. To
set up a secure connection, each hand-
set creates a cryptographic key based on
a sample of random background noise.
Everything takes place on the handsets,
so no unprotected data leaves the device.
Secure phones aren’t new. In the
1970s, the NSA developed a “secure tele-
phone unit” that featured an ordinary-
looking push-button landline phone
connected to a crate-size scrambler. What
has changed is that consumer smart-
phones have created an explosion of new
opportunities for snooping. Handsets
can be infected by malware that listens
to calls, copies data, or transmits a device’s
location. Some spies even employ fake
base stations, known as interceptors, that
harvest calls and text messages.
That’s reason enough for politicians,
dissidents, and top executives to worry.
Last year, the prime minister of Turkey
ordered cryptophones for all his minis-
ters after discovering bugs in his office
and car. At ESD, Goldsmith says, most
of his customers are U.S. multination-
als worried about economic espionage
by China, whose military conducts large-
scale efforts to pilfer data. “We get a lot of
people who have had information from
one-to-one discussions over the telephone
somehow get out,” he says.
Examples aren’t hard to come by.
In February, a politically embarrass-
ing conversation between a U.S. State
Department staffer and the Ameri-
can ambassador to Ukraine was leaked
onto YouTube. “All Department of State
government-owned BlackBerry devices
have data encryption. However, they don’t
have voice encryption,” said State Depart-
ment spokeswoman Jen Psaki.
The CryptoPhone’s $3,500 price tag
includes three years of service, not includ-
ing calling charges. That puts the device
beyond the reach of most individuals and
small businesses. A competing device, the
Hoox m2 smartphone that French IT con-
tractor Bull began selling in January, sells
for 2,000 euros ($2,740) and is also aimed
at corporate users.
For the most part, consumers haven’t
joined the security rush. According to Gart-
ner, a firm that tracks technology trends,
few have even purchased antivirus software
for their phones. Sales of mobile security
software are about $1 billion a year, a frac-
tion what’s spent on desktops, even though
mobile devices now outnumber PCs.
Yet secure communication products
could eventually have mass appeal as con-
sumers tire of being tracked online. Some
of the most successful apps of the past
year have featured self-destructing mes-
sages or anonymous bulletin boards.
Companies on a budget could turn
to the $629 Blackphone handset, which
launched in February and also offers
encrypted calling. The device is the prod-
uct of a joint venture between Spanish
smartphone startup Geeksphone and
Silent Circle, a company that markets
apps for encrypted calling and e-mail on
Apple and Android devices.
The Blackphone lacks some premium
security features, like the ability to foil
fake-base-station attacks, and it isn’t mar-
keted as being “NSA-proof ” either. But
it still offers significantly better security
and privacy than a conventional handset,
says Javier Agüera, cofounder and chief
technology officer of Geeksphone. “Black-
phone is for the people, not just a small
elite,” he says.
— Tom Simonite
Cryptophones Offer Secure Calls
Run to Safety
Global spending on security software
for mobiles is growing
4/3/14 9:02 AM
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